Summer is over but crypto-winter is still in full force. Despite the more or less $6000 support holding more stubbornly than I expected, I continue to expect Bitcoin to breach it sooner or later. I took a bit of a summer hiatus from writing any blog articles, but I'm back now and will be bringing you frequent content again, starting with my current outlook on the market.
Winter is here
And it has been for a long time now. The dreaded crypto winter of 2014 has reared it's ugly head once more to give us another taste of it's medicine and just like last time it is turning out to be a long one at that. Unfortunately, it's a necessary process and a result of market psychology.
At the core of market psychology is the herd mentality, and whichever way the herd goes is where the price follows. Right now we've reached somewhat of an equillibrium between buyers and sellers, with neither outnumbering the other enough to make the price move significantly up or down. The sellers are not selling enough because the price is not high enough for them to take profits and not low enough to scare them into panic-selling. The long-term bulls on the other hand don't seem to think the current price is worth buying yet. The highs are still getting lower and despite the lows marginally getting higher than $5800, it is unimpressive to say the least.
Without a majority of the herd swinging one way or another it becomes a battle between hope and fear where one side hopes that the bottom at $6000 is in and the other side fears that this bottom might break. When it comes to people hoping that their money becomes worth more, versus people who are afraid their money might diminish I consider the latter to be more powerful when push comes to shove. People are by nature, after all, risk-averse. And without a bull-run and subsequent media-hype there isn't enough new money entering crypto to make any kind of noticable change, whilst disillusioned crypto-investors are throwing in the towel every day right now. What's left are the traders who ride the waves until the waves continue to diminish enough so that no trader can ride it any further, which is a process we are seeing right now on the charts.
If 50% of the herd is bearish and 50% of the herd is bullish, then in order to become a majority of bulls one needs to convert part of the bears into bulls. Since the current market conditions are the cause of them being bearish, the only way for these bears to become bulls is if the market conditions change, and become more favorable for bullish action again. In other words: We need to go down, so we can pick up some extra bulls along the way.
That's why markets need to bottom: We need the entire herd with us, and as long as there is confusion or divisiveness among the herd it's natural inclination will be to go down. This is why I would welcome, and honestly expect, another serious leg down in the price of Bitcoin. The lower we go, the more long-term bulls will rejoin the fold and the sooner we will reverse the trend.
Summer is coming
While the dreaded crypto winter is enough to make anyone get depressed, there is good news on the horizon. Crypto never was a short-term play and it was always going to be years before reaching anywhere near it's final endpoint. At the end of crypto winter, when the true bottom has been found, there should follow a glorious bull run similar to all the previous times before. Even for those who bought in December, those who HODL'ed should be rewarded significantly. Remember that the previous bubble took us to $1250 or so, and the bubble of 2017 far exceeded that price. Even those who bought at the top gained more than 15x. I myself got into crypto during the bubble of 2013 when we were nearing the top, and despite the following crypto winter I HODLed and came out better from it than I ever thought.
If you were to ask me: 'When bull run?' I would say 'Maybe Q1 or Q2 of 2019'. But this is just my gut-feeling, and nobody knows for sure.
The lesson I learned from surviving last crypto winter is: Don't despair - accummulate while you can. I myself have not sold a single crypto for FIAT, and I am in fact waiting on the sidelines ready to buy. But at a lower price. I am confident that with me are a lot of likeminded investors. The sooner we drop lower and give these people the chance to buy in, it will herald the start of a new bull-run. Those who buy at it's lowest point, are those who will HODL the longest time for they are the ones who truly believe in the future of crypto.
Don't forget about the fact that despite the lower prices, there is more development and investment (billions) in cryptocurrency this year than ever before. Or the fact that the Hashrate of Bitcoin is ever increasing meaning more miners are entering the network, up to the point where many miners are willingly mining BTC at a loss yet they continue to see this as a worthwhile investment. Or the fact that nobody who understands blockchain thinks it's a bad idea.
So HODL on, especially to your BTC, and have no fear. If you've survived this far, you're half-way there now. It will get worse yet, but after every rain comes the sun.
And remember: When in doubt, zoom out:
not for long....that dip/shakeout was just bought...
That was something weird for sure! But I didn't mean that move specifically. I mean that overall, I think in a while we'll see another move down. Could be today, could be two months from now
Yeah... crypto going nowhere.
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As long as it's decentralized it isn't!
their is no point in centralised crypto
How I missed your motivational posts my friend!
Welcome back!
Thanks! Had to take a few weeks off due to a personal vacation (greece!) and because of the depressed market the news was thin anyway, but I'm back now and should be writing regularly again! :)
I think this a good article, but when speaking of sellers and buyers, why are the sellers not selling at this price? In my country I am allowed to move from alts to btc with no tax implications. But I pay 30 percent tax on a move to fiat, and it is being argued that stable coins are fiat as they are supposed to be backed by fiat. So for me to sell the price needs to drop 30 percent so I can buy more back. Yes I can see the price of bitcoin going below 4500 but I can also see the bottom being at 5000 or 5500. In this case their is a huge risk in selling my btc to fiat. Every country has different taxation laws, btc dominance is growing which kind of tells me many holders of crypto are in a similar situation to me. The bottom is a process. When looking at total market cap vs bitcoin market cap, I do wonder if we have not bottomed. I think for the bitcoin price to drop into the 4000 range the total market cap may need to drop to less than 100 Billion USD. Thousands of bitcoins were being bought by a whale at the 7000 dollar range a few weeks ago and a big short order came in shortly after that (probably the same whale protecting his or her investment). In my country must pay 30 percent tax on gains if I have traded the crypto asset but am not allowed to show losses as of yet on crypto assets. I took some profit in January but now the tax implications are such that it makes no sense for me to sell. How many longer term holders are in the same situation? Thus I choose to accumulate at the moment.
I think the main reason the sellers are not selling is because everybody who wanted to sell at this price would have done so a long time ago by now.
And yes there are certainly a lot of other reasons too like the tax issue you mentioned. I myself have never sold anything partly also because the taxes make it confusing and complex
Especially when you have millions/billions worth of crypto this is a bigger problem. There is no way to cash out all at once without giving away half of it to the taxes and such. This is why I think Monero has for a long time been a big thing amongst whales in which they can put their profits, and why it is certainly undervalued for this reason by the wider crypto community. But the value of it is only clear once you run into these problems
I think we have FINALLY come close to running out of weak hands willing to sell at a bad time. At least I hope so.
So glad your back :) No one on Steem writes about crypto like you do. Thoughtful and unbiased. I hope you enjoyed Greece. It's on my short list of places to visit.
I agree the market is bad but the news coming out of good crypto projects has been very very good with a lot of investment money by large established corporations. It is just a matter of time before the market mindset catches up to the ongoing advancements.
Cheers and welcome back! You were definitely missed.
Thanks! I try to keep it real :)
Greece was wonderful!
Firstly: welcome back! I hope you are relaxed and that you had an enjoyable time!
So painfully true.
Also very true.
You already know my feelings on another big dip (that there won't be one). My thoughts are that the bulls don't think that the current price isn't worth buying into, rather they are still afraid that the bears may continue to do what you say they will (drop the prices further). I still think there is WAY too much focus on the traditional financial markets and their take on crypto right now, especially futures. This focus and it's associated fears are unfounded in the long-term, but good old herd mentality is difficult to break! Right now I think we'll just continue to bounce along at current prices until the market becomes bullish again. I still predict a big bullish phase in 2018.
Thanks! Had a great time! Just what I needed.
Yep, I agree that there is too much focus on those things. During bull runs they were enough to create massive spikes but during a bear run it doesn't mean anything unless, well, it means something. Like, actual Bitcoins being bought with actual millions. What's happening now is them all setting the stage but it will take a long time before it has any effect. It's not going to be one day some stock exchange does something and bam the whole world goes crazy and buys in, I think.
The real catalyst is going to be the halvening that's coming at +/- 2020. I think it played a big role in the last bullrun too. This is why I am leaning towards thinking that we will not start the next bull-run until we are closer to this mark, and why I think mid-2019 it may start to become clear we are bullish again. April, leading up to September, with another parabolic move in December? Something like that is my gut feeling.
Why the halvening? Because it's a tangible change to the market, not speculative.
Also, this time-frame would coincide perfectly with all the institutions setting up their trading desks and other financial tools. They're working on it now, but by mid 2019 the first ones will start actually servicing clients.
Some interesting thoughts here. I'm glad I read this today as it gave me a broader understanding of crypto. Thanks for sharing. :)
You're welcome!
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